DAL

Delta is a high-quality airline trading like a low-quality one. At $92.57 the stock is just 12.1x FY2025 diluted EPS of $7.66 and ~1.0x sales, while the business threw off $8.34B of operating cash flow and, per MD&A, ~$4.6B of free cash flow. The balance sheet is visibly healing: long-term debt fell 11.9% to $11.9B (with $2.9B of early repayments cited in the cash-flow discussion), the current portion dropped 23.8%, equity grew 36.4% to $20.9B and retained earnings rose 51.9% to $13.3B. ROE of 24% on a 7.9% net margin is genuinely strong for this industry. That combination — single-digit P/E on a deleveraging, cash-generative franchise — is the core of the buy case.

The quality of the headline growth deserves a caveat the rubric demands I flag. Net income jumped 44.8% and EPS 43.7%, but operating income actually fell 2.9% (down $173M, per MD&A). Almost the entire earnings gain came below the line: non-operating swung from a $1.3B expense in 2024 to $363M of income in 2025, 'primarily due to mark-to-market gains on certain of our equity investments.' That is non-recurring and shouldn't be extrapolated. So I treat normalized earnings power as roughly flat year-over-year, which tempers conviction.